Restructuring Costs

12 Months Ended

Dec. 31, 2013

Restructuring and Related Activities [Abstract]

For the year ended December 31, 2013, the Company recorded pre-tax restructuring charges in continuing operations of $67.5 million ($41.2 million after-tax or $0.39 per share) which are presented as restructuring costs in the consolidated statement of operations. These pre-tax charges were comprised of $55.1 million in non-cash long-lived asset impairment charges, $4.2 million in facility closure costs and $8.2 million in employee severance and termination benefit charges. The non-cash long-lived asset impairment charges were based on analysis of the estimated fair values, which represents Level 3 unobservable information in the fair value hierarchy.

Based on the ATI's 2014-2018 strategic planning process, which was completed in the fourth quarter of 2013, the Company updated its strategic assessment of the likely future use of several manufacturing facilities. The strategic investments in manufacturing capabilities and process technologies in the last several years enable the closure of older, higher-cost operations, and the streamlining of manufacturing processes to reduce ATI's manufacturing footprint.

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In the High Performance Metals segment, the Company permanently closed the previously idled Albany, Oregon standard-grade titanium sponge facility, resulting in a $38.1 million non-cash asset impairment charge. The closure of this facility was enabled by the continued improvement in operating efficiencies at the Company's Rowley, Utah titanium sponge facility, and forecasted market conditions for titanium products including availability of titanium sponge from internal and external sources, and the cost and availability of titanium scrap. This charge was to fully impair the long-lived assets, as management does not anticipate any residual value in the facility. In addition, a charge was recorded for $3.5 million of asset retirement obligation costs, which are primarily expected to be incurred in 2014.

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In the Flat-Rolled Products segment, the Company will permanently close the previously idled New Castle, Indiana stainless finishing facility, and the Wallingford, Connecticut stainless finishing facility, which is expected to be permanently closed in mid-2014. Based on market conditions and the recent and sustainable operating efficiency improvements in other flat-rolled products operations, these less efficient facilities were no longer cost competitive. The closure of New Castle and Wallingford resulted in $6.3 million and $2.7 million, respectively, of non-cash asset impairment charges to fully impair the long-lived assets as any anticipated scrap value was expected to be offset by disposal costs. Facility closure costs included $0.3 million and $0.4 million in asset retirement obligations for New Castle and Wallingford, respectively. Additionally, pension and other postretirement benefit termination charges of $5.0 million, and $1.0 million of employee termination costs were recognized for approximately 65 employees affected by the Wallingford facility closure.

In addition to the above facility closures, restructuring costs included $8.0 million of other non-cash long-lived asset impairment charges in the High Performance Metals segment, including $3.3 million in forged products operations based on changes in manufacturing processes, $2.4 million related to changes in the expected future use of specialized long-lived assets based on market conditions, and $1.8 million associated with the Rowley facility following changes to the production processes for premium quality titanium sponge qualification. Other severance charges included $1.1 million in pension benefit termination charges in the High Performance Metals segment, and $1.1 million in severance costs, collectively affecting approximately 75 employees.

Reserves for restructuring charges at December 31, 2013 were approximately $2 million for severance costs, which are expected to be paid in 2014.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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